Big business suppressing SME growth?

[duncan drennan]

How true do you think this statement is?

If this sounds like a case of why the public sector should not be in charge, think again. The Asgisa report notes that we pretty much do not have a small and medium enterprises (SME) sector because prices charged by dominant companies in steel, fuel, chemicals, telecommunications and banking are so high that they all but preclude small businesses from taking these products and services and turning them into business opportunities. These companies are privately owned: private ownership does not in itself drive prices down.

Full story on M&G

Maybe the problem is more with the length of time it takes the competition tribunal to investigate and act on a problem? By the time the case is resolved all the smaller players are already out of business...

[rob@smorfitt.co.za]

I think that small business forget they are small. Certain industries are not suited to small business. However i am also aware of two businesses in the steel industry who were start ups that grew into R70m a year and R100m a year operations.

SME's must stop expecting favours from industry and government. earn it. SMEs have it tough but if you know what you are doing you can excel. ai am an SME.
rob

[Frankincense]

Certainly it is true. Earth is not conditioned for little fish to thrive amongst beasts.

Tribunals, commisions and Monkey PlayHouses...all but viruses in the adminisphere to errode justice.

The Big Fish will eat the small fish.

I Concur.

[Dave A]

I don't see how high prices suppress SME entry. It's more a capital issue and massive red tape issues that keeps SMEs out of certain sectors.

When it comes to pricing, I agree that private ownership does not in itself drive prices down. The driver there is competition.

[BonaFide]

I am inclined to believe that it is not up to the bigger, established businesses to ensure the survival of small and new enterprises. They have already followed the road of starting up small and through the years have built their businesses to what they are today.

Competition is good for the consumer, but bad for established companies as it means smaller market share and we all know that we want to ensure that our businesses grow too.

The onus rests on Government to ensure a thriving and competitive market through establishing a structure whereby it is relatively easy to strat up a business. However, in SA we are in a position where there is too much beaurocracy and 'protectionism' of existing parastatals such as Telkom, Arcelor Mittal (although here it is more about their market dominance based on market share, but helped here by the import parity pricing structures implemented by Gov) and the like.

There have been many success stories of small business surviving and going on to become serious players in the market.

There is too much of this expectation that everyone has a right to become a successful business. More needs to be done in terms of people realising that it is up to THEMSELVES to ensure their success.

Yes, more can be done by governments to make it easier to start up businesses in terms of reducing red tape and the like, but to expect more than this is silly.

[garthu]

I personally believe that all that SME suffers is a lack of good entrepreneurship and skills. Turning towards factors like governement, telecoms, fuel etc, whilst they do have an impact on new and exisiting, big or small business, is just really a way to point a finger and say "thats why we didn't succeed/do it"

Sure it would be easier if all of the red tape/costs wasn't there, but it be just as easy then for the big guys to capitlise from same

It starts with a great idea, then implementing which is where it normally falls flat. I don't know how many good ideas i have seen, but never backed by a written or even well thought out business plan

Skills are the bottom line i reckon - it's even a concept i have thinking through a couple of months - ideas are out there, skills to launch aren't. Opportunity?? Alot guys have used the downturn in economy to point fingures etc at government etc (includes me ), but the reality is guys are seriously capitalizing from it with good ideas.

[derrickm]

"we pretty much do not have a small and medium enterprises (SME) sector"

I don't believe this at all. What are the statistics? I seem to recall that SMEs contributed around 33% of GDP in 2001...

I'm not saying it couldn't be better, just that the writer is exaggerating a little for effect :-)

[BonaFide]

I personally believe that all that SME suffers is a lack of good entrepreneurship and skills. Turning towards factors like governement, telecoms, fuel etc, whilst they do have an impact on new and exisiting, big or small business, is just really a way to point a finger and say "thats why we didn't succeed/do it"

Nail on head. It is far easier to blame all and sundry for failures than to accept responsibility for it.

Entrepeneurship needs to be nurtured, but not by taking away all risks with starting up a business. Good business is based on sound principles and all have experienced the element of risk and found ways to overcome it. You take away that factor and all you are left with is a large number of companies wallowing in a cesspool of mediocrity, knowing taht they will be protected from failure and therefore have no real interest in ensuring that they need to take responsibility in order to survive.

[rob@smorfitt.co.za]

Big business and SMEs

Bonafide said "There is too much of this expectation that everyone has a right to become a successful business".

I could no agree more. Government has created this expectation, and the BBBEE process,while well intended,perpetuates this. I see so many business plans where the owner of the business does not even feature in the organogram, because they will be sitting at home, while all the "managers" and "directors" will do the work. They really have no clue. Entrepreneurship is about working hard and working smart. It is about driving the process. Not watching the process. Big business is not stopping SMEs from succeeding - a lack of real genuine entrepreneurial spirit and drive is.
rob

[Dave A]

Big business is not stopping SMEs from succeeding - a lack of real genuine entrepreneurial spirit and drive is.
rob

[Paddy]

Too many people out there think being an SME means doing what the big boys do, but on a small or medium scale. They leave their corporate job and then try sell their skills on the open market, instead of being either innovative or identifying a niche. They end up owning a job, instead of owning a business and then wonder why they cannot compete. I once read a book that was quite informative, called "Blue Ocean Strategies". Very worthwhile.

There are also definite ways in which legislation could facilitate operating an SME, but so many others succeed that red tape can only be used as an excuse for failure and not as a reason.

Another problem or disadvantage we sit with is the fact that we often educate the concept of risk right out of people. People who have studied any of the engineering disciplines have been taught NEVER to take any risks. Risk in design and construction is bad, but in business it is often an essential ingredient. Business is competition and you always need a loser in any competition.

[rob@smorfitt.co.za]

RIsk issues

I think risk is a case of horses for courses. I do not want an engineer taking risks with my life. entrepreneurship is about understanding, assessing and minimising risk - and we are not taught that. Our education system under every government has been about "do as you are told", never about debate and challenging the paradigms. We have never been taught to think for ourselves, hence the low entrepreneurial index in South Africa.

[Upstairs]

SME's can deliver better service

I agree that we cannot blame others for failing in business. Most large companies lose their ability to deliver good and personal service. That is where the small business can make the difference. You will however not always get the business the first time you knock on the customer's door. It takes time and you have to be consistent.

[garthu]

Upstairs

Couldn't agree more. The responsibilty for business is in the owner - no one else. Small business has fantastic opportunity in this country to deliver service as most large business's have lost that, especially in S. Alas, not many small business' do though